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Federal efforts to aid minority businesses began in the 1960's when th

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Re: Federal efforts to aid minority businesses began in the 1960's when th  [#permalink]

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New post 03 Sep 2017, 00:08
Hey GMATNinja and GMATNinjaTwo

Can you help to explain Q5 and Q7? I got them wrong

5. The author refers to the "financial and operating problems" (line 38) encountered by MESBIC's primarily in order to

(A) broaden the scope of the discussion to include the legal considerations of funding MESBIC's through sponsoring companies
(B) call attention to the fact that MESBIC's must receive adequate funding in order to function effectively
(C) show that sponsoring companies were willing to invest only $500,000 of government-sponsored venture capital in the original MESBIC's
(D) compare SBA and MESBIC limits on minimum funding
(E) refute suggestions that MESBIC's have been only marginally successful



7. Based on information in the passage, which of the following would be indicative of the pragmatism of MESBIC staff members?

I. A reluctance to invest in minority businesses that show marginal expectations of return on the investments
II. A desire to invest in minority businesses that produce goods and services likely to be of use to the sponsoring company
III. A belief that the minority business sector is best served by investing primarily in newly established businesses

(A) I only
(B) III only
(C) I and II only
(D) II and III only
(E) I, II and III
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Re: Federal efforts to aid minority businesses began in the 1960's when th  [#permalink]

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New post 17 Sep 2017, 08:10
15 minutes.
8/9
I think it's level between 650 to 680 (not 700 level question)
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Re: Federal efforts to aid minority businesses began in the 1960's when th  [#permalink]

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New post 20 Sep 2017, 20:53
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pikolo2510 wrote:
Hey GMATNinja and GMATNinjaTwo

Can you help to explain Q5 and Q7? I got them wrong

5. The author refers to the "financial and operating problems" (line 38) encountered by MESBIC's primarily in order to

(A) broaden the scope of the discussion to include the legal considerations of funding MESBIC's through sponsoring companies
(B) call attention to the fact that MESBIC's must receive adequate funding in order to function effectively
(C) show that sponsoring companies were willing to invest only $500,000 of government-sponsored venture capital in the original MESBIC's
(D) compare SBA and MESBIC limits on minimum funding
(E) refute suggestions that MESBIC's have been only marginally successful



7. Based on information in the passage, which of the following would be indicative of the pragmatism of MESBIC staff members?

I. A reluctance to invest in minority businesses that show marginal expectations of return on the investments
II. A desire to invest in minority businesses that produce goods and services likely to be of use to the sponsoring company
III. A belief that the minority business sector is best served by investing primarily in newly established businesses

(A) I only
(B) III only
(C) I and II only
(D) II and III only
(E) I, II and III

For #5, refer to the following portion:

Quote:
Following early financial and operating problems, sponsoring corporations began to capitalize MESBIC's far above the legal minimum of $500,000 in order to generate sufficient income and to sustain the quality of management needed.


This portion implies that BEFORE the sponsoring corporations began to capitalize MESBIC's far above the legal minimum, sufficient income was NOT generated and quality of management was NOT sustained (financial and operating problems). This implies that the increased capital was needed to avoid financial and operating problems. In other words, adequate funding (capital) is necessary to avoid financial and operating problems and, thus, function effectively.

Choice (B) is the best answer.

As for #7, MESBIC staffs are compared to MESBIC directors. The directors are said to "prefer deals that are riskier and less attractive than normal investment criteria would warrant," while the staffs would prefer that a more "prudent course" be followed to avoid the disappointing results of the original SBA. This suggests that the directors would be more likely to prefer a deal involving a business that shows marginal expectations of ROI (a deal that is less attractive than normal investment criteria would warrant), while the staffs would be reluctant to invest in such a business. This seems to fit with the first option:

Quote:
I. A reluctance to invest in minority businesses that show marginal expectations of return on the investments

We are also told that the staffs "feel that minority entrepreneurs and businesses should be judged by established business considerations." This evidence further supports the first option, since the staffs would judge minority business by established business considerations (such as ROI expectations).

As for the second option, we are told that the "staff members believe their point of view is closer to the original philosophy of MESBIC's". So what do we know about the original philosophy of MESBIC's? The original function of the MESBIC's was to "provide capital and guidance to minority businesses that have potential to become future suppliers or customers of the sponsoring company." An advantage of this approach is described in the third paragraph: "since potential markets for the minority businesses already exist through the sponsoring companies, the minority businesses face considerably less risk in terms of location and market fluctuation." In other words, those minority businesses would face less risk because they will become suppliers of customers of the sponsoring companies.

Quote:
II. A desire to invest in minority businesses that produce goods and services likely to be of use to the sponsoring company

Thus, a group who's point of view is similar to this original philosophy of MESBIC's would be in favor of investing in businesses that produce goods and services likely to be of use to the sponsoring company. This fits with the original intention of the MESBIC's. Furthermore, it reduces risk, which would appeal to the risk-averse staffs

Quote:
III. A belief that the minority business sector is best served by investing primarily in newly established businesses

As for the third option, there is nothing in the passage suggesting that this is the belief of the staffs. Furthermore, we know that the staffs are risk-averse, and investing in newly established businesses is likely a riskier approach that would be preferred by the directors.

Thus, options I and II fit, and choice (C) is the best answer.
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Re: Federal efforts to aid minority businesses began in the 1960's when th  [#permalink]

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New post 11 Apr 2018, 23:17
Got 2 wrong. Questions 4 and 5. Both silly mistakes in trying to answer quickly :'(
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New post 06 May 2018, 17:03
p1 = sba - loans - gov mng - tech assistance >>> new business + disappointment ---> reason for this.
P2 = sol of above prob.MESBIC
P3 - How MESBIC is a right sol for all.
p4 - A problem in MESBIC.

1. Which of the following best states the central idea of the passage?
(A) The use of MESBIC's for aiding minority entrepreneurs seems to have greater potential for success than does the original SBA approach.- correct.
(B) There is a crucial difference in point of view between the staff and directors of some MESBIC's.- p4
(C) After initial problems with management and marketing, minority businesses have begun to expand at a steady rate. - not in any passage
(D) Minority entrepreneurs wishing to form new businesses now have several equally successful federal programs on which to rely. - not in any passage.
(E) For the first time since 1960, large corporations are making significant contributions to the development of minority businesses. --- P3
------------------------------------

2. According to the passage, the MESBIC approach differs from the SBA approach in that MESBIC's - P2
(D) rely on the participation of large corporations to finance minority businesses --- only this option standout.
------------------------------------

3. Which of the following does the author cite to support the conclusion that the results of the SBA program were disappointing?-p1
(C) The small percentage of the nation's business receipts earned by minority enterprises following the programs, implementation
------------------------------------

4. Which of the following statements about the SBA program can be inferred from the passage? p1
(A) The maximum term for loans made to recipient businesses was 15 years. --- 15 yr was given for something else.
(B) Business loans were considered to be more useful to recipient businesses than was management and technical assistance. --- no such comparison
(C) The anticipated failure rate for recipient businesses was significantly lower than the rate that actually resulted. --- the results were disappointing, since managerial inexperience, unfavorable locations, and capital shortages led to high failure rates ; this means this much high fail was not expected.
(D) Recipient businesses were encouraged to relocate to areas more favorable for business development. --- not as such
(E) The capitalization needs of recipient businesses were assessed and then provided for adequately. --- nope
---------------------------------------

5. The author refers to the "financial and operating problems" (line 38) encountered by MESBIC's primarily in order to
(A) broaden the scope of the discussion to include the legal considerations of funding MESBIC's through sponsoring companies
(B) call attention to the fact that MESBIC's must receive adequate funding in order to function effectively ----
(C) show that sponsoring companies were willing to invest only $500,000 of government-sponsored venture capital in the original MESBIC's
(D) compare SBA and MESBIC limits on minimum funding
(E) refute suggestions that MESBIC's have been only marginally successful
--------------------------------------

6. The author's primary objective in the passage is to
(A) disprove the view that federal efforts to aid minority businesses have been ineffective --- p1
(B) explain how federal efforts to aid minority businesses have changed since the 1960's --- only this one is covering the most out of all.
(C) establish a direct link between the federal efforts to aid minority businesses made before the 1960's and those made in the 1980's --- very less coverage.
(D) analyze the basis for the belief that job-specific experience is more useful to minority businesses than is general management experience --- P4
(E) argue that the "social responsibility approach" to aiding minority businesses is superior to any other approach ---- less coverage.
-------------------------------------

7. Based on information in the passage, which of the following would be indicative of the pragmatism of MESBIC staff members?
pragmatism - an approach that evaluates theories or beliefs in terms of the success of their practical application.
I. A reluctance to invest in minority businesses that show marginal expectations of return on the investments - less chance of success
II. A desire to invest in minority businesses that produce goods and services likely to be of use to the sponsoring company --- smelling success.
III. A belief that the minority business sector is best served by investing primarily in newly established businesses

(A) I only
(B) III only
(C) I and II only - correct
(D) II and III only
(E) I, II and III
------------------------------------

8. It can be inferred from the passage that the attitude of some MESBIC staff members toward the investments preferred by some MESBIC directors can best be described as - p4
such differences in viewpoint ---- this is for difference in directors and staffs

(E) disapproving - correct.
------------------------------------
9. The passage provides information that would answer which of the following questions?
(D) How has the use of federal funding for minority businesses changed since the 1960’s? --- p1
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Re: Federal efforts to aid minority businesses began in the 1960's when th  [#permalink]

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New post 13 Jun 2018, 20:22
GMATNinja, can you please guide me to find the answer for Q5 "The author refers to the "financial and operating problems" (line 38) encountered by MESBIC's primarily in order to" from the passage.

Thanks!

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Re: Federal efforts to aid minority businesses began in the 1960's when th  [#permalink]

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New post 23 Jun 2018, 07:57
gsingh0711 wrote:
GMATNinja, can you please guide me to find the answer for Q5 "The author refers to the "financial and operating problems" (line 38) encountered by MESBIC's primarily in order to" from the passage.

Thanks!

Regards,
Gurpreet

Hey gsingh0711,

I believe your question was addressed in an earlier post: https://gmatclub.com/forum/federal-effo ... l#p1929534. Let us know if that doesn't clear up the doubts.

To ask additional questions not already addressed in this thread, feel free to use the request verbal experts' reply button :)
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